6 worst ways to get credit card rewards

Whether you have a credit card with cashback or travel bonuses, you probably have the opportunity to use your bonuses in several ways.

While some cards allow you to squeeze more value out of every point or mile (the standard benchmark is 1 cent a card), some redemption options will give you less.

So, when it comes to maximizing your credit card rewards, you don’t need to know all the tricks of the trade. Sometimes you just need to know which redemption options to avoid.

6 worst ways to get credit card rewards

Estimating credit card rewards is a tricky game, especially if you have miles or points instead of cash back.

“Rewards points on their own have no value,” says Jason Steele, travel and credit card expert. “They’re only worth what you can buy for them.”

However, if you used your credit card rewards in any of these ways, you could have left money on the table. Keep reading to find out the worst ways to use these rewards.

1. Cashback on the travel card

If you have a cashback credit card, getting cash usually provides the most value. But this is rarely the case with travel.

Take, for example, the Capital One Venture Rewards credit card. The base cost for redeeming miles for a trip is 1 cent each, and you can earn more by transferring your rewards to one of the bank’s partner airlines.

However, if you redeem your miles for a credit statement or paper check, you will only receive 0.5 cents per mile.

The Chase Ultimate Rewards program is an exception to the rule and gives you 1 cent per point if you redeem it for cashback. But if you have one of the program’s travel credit cards – Chase Sapphire Preferred Card or Chase Sapphire Reserve – you can get 1.25 or even 1.5 cents per point when redeemed for Chase travel, or perhaps even more by transferring your rewards for an affiliate program of hotels or airlines.

“Earlier, before I knew how valuable the rewards were, I cashed in all my Chase Ultimate Rewards points. [for $650]says Brandon No, travel expert at FinanceBuzz. “It could be traded for a trip for almost $975. Worst of all, I used that money to buy parts for a car that I sold a few months later.”

If you need money back flexibility, stick with a cash back credit card.

2. Pay with points

Some rewards programs, including Chase Ultimate Rewards and American Express Membership Rewards, allow you to use your rewards to shop online directly from retailers.

This arrangement is based on convenience – just add your card and then choose to use your rewards at checkout. The problem is that you rarely get even the standard 1 cent per point using yours this way.

For example, in Chase, using points on Amazon.com will earn you 0.8 cents per point. With Membership Rewards, you’ll get as little as 0.7 cents when you redeem your points at Amazon.com, Best Buy, Boxed, GrubHub, and select other retailers.

There are, of course, exceptions. With the Business Platinum Card® from American Express, Steele says, you get 35% of your points back (up to 500,000 bonus points per calendar year) when you redeem them for flights with your chosen airline, which gives you about 1.5 cents per point (applies to flights booked on amextravel.com).

3. Use product rewards

If you’re a consumer who generally prefers experiences over “things”, it might be tempting to use credit card rewards to get the latest technology or accessories for your travels.

However, there is never really a good time to use your points to buy items from a catalog. For example, with Amex, you can get an Apple Watch Series 5 for 85,506 points, or $427.53 including tax, which gives you just 0.5 cents per point.

If you have Delta SkyMiles, you can purchase a Kuerig Coffee Maker for 43,654 Miles or purchase it from Best Buy for $199.99. With this ransom, you get 0.46 cents per mile.

“Understand how much your points are worth on paper by comparing them to the cash value,” says Mark Jackson, channel manager for Brad’s Deals. “Then make your decision based on the options available.”

4. Exchange hotel credit card rewards for anything other than hotels.

One downside to having a hotel credit card is that your redemption options are limited, but you should resist the urge to use your points for anything other than a free stay.

Take, for example, the World of Hyatt. The hotel rewards program has one of the most valuable reward currencies of any travel program, offering an average of 2 cents per point per hotel stay. But if you redeem points for meals, spa access, and other on-site credits, you’ll earn between 0.5 cents and 0.83 cents per value point, depending on how much you use.

5. Exchange airline bonus cards for anything other than flights.

As mentioned earlier, you can use your Delta SkyMiles to buy a coffee maker for 0.46 cents per mile, or use them for award flights at an average cost of 1.61 cents per mile.

You can also use your rewards to purchase a membership to Delta Sky Club, the airline’s flagship network of airport lounges. But redeeming miles in this way will earn you only 1 cent apiece.

6. Pass on rewards to friends and family

Some credit card reward programs allow you to share your points with other people for free. For example, with Chase, you can transfer points to a spouse or household partner. Amex allows you to transfer rewards to a frequent flyer account in someone else’s name if they have been authorized users of your account for at least 90 days.

However, if you wish to share IHG Rewards Club points, you will be charged $5 for every 1,000 points you transfer, or 0.5 cents per point. Since IHG Points cost an average of 0.55 cents per free stay, exchanging them effectively neutralizes their value.

Also note that Citi allows points to be transferred to another person for free, but you can only transfer up to 100,000 points per year and the total points expire 90 days after the transfer.

bottom line

While it’s always a good idea to try and get as much money out of credit card rewards as possible, there are times when it’s worth considering getting fewer rewards.

“When you have more points than you can spend on optimal rewards, it makes sense to trade them for less than optimal options, rather than spend money,” says Steele.

The same happens if the alternative is to lose them. “If your points are expiring and you have no way to extend their life,” Nat says, “using them to buy goods or cash out makes absolute sense.”

However, according to Jackson, there are several alternatives. In many programs, you can prevent your rewards from expiring for any activity on your account.

“Maybe you earn one point on your credit card or transfer points to a program to prevent miles from expiring,” he says. “If there’s even a little bit of planning, you don’t have to redeem air miles for magazines, gift cards, or anything like that.”

When thinking about how to use credit card rewards, try to avoid repayment options that give you less bang for your buck, unless there’s a good reason. This may give you fewer alternatives, but you can get a lot more in terms of money.

Editorial disclaimer

The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.

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